In our last post, we offered advantages and disadvantages to a type of workers’ compensation settlement known as Stipulations With Request for Award (if you missed that post, you can find it here). In this, our second post about the types of California workers’ comp settlements, we will give you a basic primer about the second type of settlement, which is known as Compromise and Release (“C&R”).
What is a Compromise and Release settlement?
Compromise and Release is a lump sum monetary settlement paid to the injured worker to buy out any and all issues and benefits in the workers’ compensation case. A C&R is a final settlement. All parties go their separate ways and the case is closed. This means that you are totally done with the workers’ compensation system for the injury(ies) settled in the C&R. You cannot come back and claim the employer or workers’ compensation insurance carrier owes you more money, more treatment, or any other benefits for workers’ compensation for the injury(ies) settled in the C&R. You cannot reopen a C&R claiming there is any new and further disability. You may have a new workers’ compensation injury after a C&R, but you are unable to reopen or re-litigate the injury(ies) and/or anything related to the injury(ies) being settled in the C&R.
Why do employers choose a Compromise and Release settlement?
The employer or workers’ compensation insurance carrier often prefers to settle by a C&R rather than a Stipulations With Request For Award when the injured worker is no longer an employee of the employer. Frequently, the injured worker and the employer or claims administrator prefer a C&R when the issues in the case are highly disputed. Unlike a Stipulated Award where there must be specific agreement between the parties as to the percentage and rate of permanent disability payments, time periods and rate of temporary disability payments, mileage, out of pocket expenses, entitlement to the voucher etc., a C&R allows the parties to resolve all these disputed issues for a negotiated lump sum of money.
Why do injured workers choose a Compromise and Release settlement?
Injured workers often prefer a C&R when they desire to maximize their monetary recovery in the workers’ compensation case. Injured workers often choose a C&R because they desire control over how they spend the money from their settlement. It is up to the injured worker to make arrangements to use the settlement money as they see fit to take care of and pay for their future medical care. Because the case will be closed, you are no longer in the workers’ compensation system. The injured worker may use the settlement money to go to their own private doctor(s) of their choice outside of the employer or workers’ compensation insurance carrier’s Medical Providers Network (“MPN”). Treatment requests no longer go through Utilization Review and/or Independent Medical Review since the injured worker is no longer in the workers’ compensation system.
Brief Compromise And Release Logistics
In cases where the injured worker is on Medicare or has an expectation of becoming eligible for Medicare within 30 months of the order approving the C&R, a portion of the C&R settlement money must typically be placed into a self-administered account for a Medicare Set-Aside (“MSA”). A MSA is an estimated value of the injured worker’s lifetime future medical care for the industrial body parts/medical conditions based on the injured worker’s estimated life expectancy. This settlement money in the self-administered account for the MSA must only be used for medical care expenses related to the industrial injury(ies) that would otherwise be covered by Medicare. In some cases, Medicare is required to approve the MSA as providing a sufficient amount of money for the industrial future medical care. In certain cases, there may be an offset i.e., reduction by Social Security in monthly Social Security benefits based on the settlement money paid to the injured worker in the C&R.
The C&R must be approved by a signed order by the Workers’ Compensation Appeals Board (“WCAB”) judge. The lump sum of money is generally paid to the injured worker by the employer or workers’ compensation insurance carrier within 30 days of the date of the order approving the C&R by the judge. Unlike a Stipulations With Request For Award settlement which is required by the statute to be paid out to the injured worker in biweekly payments at a rate set by the statute, the lump sum settlement money in the C&R is required by the statute to be paid out in its entirety—it is paid in full to the injured worker for the total amount of settlement money, within 30 days of the signed order by the judge to the injured worker. The employer or claims administrator gets a credit, for example, a deduction for any permanent disability advances made in the case. Late payments of the C&R settlement money made after 30 days from the order approving the settlement by the judge may be subject to penalties and interest.
Ford & Wallach Are Trusted And Experienced Workers’ Compensation Attorneys In Los Angeles
The attorneys at Ford & Wallach are on your side. We provide workers’ compensation legal services to the Los Angeles area; San Fernando, San Gabriel and Santa Clarita Valleys; Long Beach; Inland Empire; Ventura and Orange County. We offer free case evaluations and will strategically guide you through the California workers’ compensation process. Contact us us at 213.380.3140.